Putin in Kyiv

On March 19, Russian President Vladimir Putin paid a one-day working visit to Ukraine. The event was designed to signal a major improvement in the atmosphere of bilateral relations. For Putin, it was both a fence-mending move toward Ukraine and an international damage-limitation move after his disastrous involvement in Ukraine’s presidential election campaign. For Ukraine’s new leadership, it was a necessary move to reassure sections of the eastern regions’ population that political change in Ukraine does not impact adversely on Ukraine-Russia relations.

The Atmospherics

The Ukrainian leaders sought to mark a departure from former president Leonid Kuchma’s style of meetings with Russian presidents. Thus, the visit featured no joint documents and no effusive rhetoric. Ukrainian President Viktor Yushchenko termed Russia a “permanent neighbor” of Ukraine, and spoke of a “deepening strategic partnership” in his brief matter-of-fact remarks that preceded substantive comments on the issues awaiting resolution.

Putin appeared at least initially under some strain to show friendliness. On arrival he quickly extended his right hand while moving toward Yushchenko, looking animated and gesturing broadly with his left hand — an uncharacteristic style for Putin. Later, however, he looked downward while speaking, with occasional glances and shrugs toward Yushchenko. The Ukrainian president’s body language showed dignified restraint. (Ukrainian TV 5 as monitored by the BBC, March 19).

Evidently seeking to consign the assassination attempt on Yushchenko to oblivion, Putin addressed the Ukrainian president as “dear Viktor Andriyovych” and complimented him on the administrative abilities he had shown while prime minister of Ukraine (from which post Yushchenko had been dismissed at the Kremlin’s behest). Putin ended their joint news conference by saying that he had deleted from his prepared text a sentence to the effect that “of course we have different views on some issues.” Those differences, in fact, are major and persistent (see below).

Putin treated Ukraine’s Prime Minister Yulia Tymoshenko with special courtesy during their separate meeting and invited her for a working visit to Moscow. Only a few months ago, Kremlin-controlled media were demonizing Tymoshenko, and Russia’s Prosecutor-General’s office was trying to arrest her through Interpol.

Putin and Yushchenko decided to abolish the Russia-Ukraine intergovernmental cooperation commission and to replace it with an interstate Putin-Yushchenko commission, to consist of four committees: defense, international cooperation, economic ties, and humanitarian issues. Russia’s and Ukraine’s national security councils are to coordinate the activities of these committees (Interfax-Ukraine, March 19).

Some 20 supporters of defeated presidential candidate Viktor Yanukovych picketed Bankova Street with the slogans: “Yankees Out,” “Yushchenko Out,” “Putin! Putin!” and “Ukraine-Russia Together” — the slogans used by the Kremlin’s political technologists in Ukraine’s presidential campaign (1+1 TV, TV 5, March 19).

Single Economic Space

Yushchenko and Tymoshenko made clear that Ukraine has opted out of the Russia-initiated project for a Single Economic Space (SES) of Russia, Ukraine, Belarus, and Kazakhstan. The Ukrainian leaders told Putin that they opposed the SES project’s key elements: creation of supranational bodies, of a customs union and a currency union, and decision-making procedures that would “infringe on Ukrainian sovereignty” (an allusion to weighted voting that would have given Russia 40% of the votes on any decision). Instead, the Ukrainian leaders urged Putin to consent to the creation of a free-trade area, starting with the cancellation of exclusions and restrictions on bilateral trade and deep cuts in transport tariffs. Yushchenko and Tymoshenko insisted that SES must be redefined as a purely commercial undertaking, with no political agendas or superstructures. Yushchenko announced that he is appointing Economics Minister Serhiy Teryokhin (a market liberal) as presidential representative on SES issues (replacing the ancien regime’s first deputy prime minister Mykola Azarov).

Putin acted defensively on this issue and appeared poorly briefed. “The SES was not our initiative, it was not a Russian initiative,” he insisted, though “it absolutely needs to be implemented for the good of the economies of Russia and Ukraine, Belarus, and Kazakhstan.” As an argument in favor of Ukraine’s participation in SES, Putin held up Russia’s economic ties with Belarus as exemplary. Granting that the SES tariff committee (the only SES body that seems to have become operational) is a supranational body, Putin urged Ukraine to participate in its work. He also argued that Ukraine’s participation in SES would be compatible with cooperation between Ukraine and the European Union. As Russia plans to sign an action plan with the EU on forming a common economic space, Putin suggested Ukraine should join Russia in SES so that the two countries act together harmonizing their legislation with that of the EU. This idea appears to be a lighter version of the “Russia and Ukraine together to Europe” slogan of the past decade (TV 5, 1+1 TV, Interfax-Ukraine, March 19).

Bilateral Trade

Putin remarked with satisfaction that Russian-Ukrainian trade turnover in 2004 rose by 40% year-on-year, to a record of nearly $17 billion. Russia’s Ambassador to Ukraine, Viktor Chernomyrdin, felt free to exaggerate the turnover to $20 million, and to call for an increase to up to $60 billion, without however specifying a timeframe. In their selective emphasis on quantitative indicators, Putin and Chernomyrdin downplayed the decisive role of record-high prices for Russian energy in the turnover increase and the ballooning Ukrainian deficit. It was left to Yushchenko to point out, “The main problem in bilateral relations is Ukraine’s deep and growing trade deficit,” a situation that “causes alarm.” The deficit increased from $2 billion in 2000 to $6 billion in 2004, at annual rate from 36% to 40%. As Yushchenko noted, the only way to solve this problem is to create a free-trade area (Interfax-Ukraine, Itar-Tass, March 19).

Soviet Assets

During Putin’s visit, Ukrainian Minister of Foreign Affairs Borys Tarasyuk called on Russia to adhere to the terms of the 1992 Dagomys agreement, signed by the presidents, parliamentary chairmen, and prime ministers of Russia and Ukraine. The agreement requires Russia to transfer to Ukraine certain Soviet embassy buildings and other Soviet-owned real estate abroad, proportionate to Ukraine’s share of the defunct Soviet Union’s assets. Moscow never abided by that agreement, however. In recent years, Moscow has offered to lease some of those buildings to Ukraine — a proposal that Russian Minister of Foreign Affairs Sergei Lavrov repeated during his February 21 visit to Kyiv. Meanwhile, the Russian government has begun handing some of those deteriorating buildings over to various commercial entities. Tarasyuk characterized Moscow’s attitude to this issue as unfair and greedy (Interfax-Ukraine, March 19).

Gas Transit

Yuschenko defused speculation (that his predecessor Leonid Kuchma’s administration had generated) regarding the possible sale of Ukraine’s gas transit pipeline system to a Russian-led consortium. Yuschenko stated, “The existing gas transit system remains the property of Ukraine,” while any initiatives to build additional capacities would be a matter for an international consortium yet to be formed. Putin responded defensively: “I would like the Ukrainian public not to think that there are some unknown agreements … No one is trying to steal anything.” Again, the Russian president appeared poorly briefed on a key issue: misunderstanding some of Yushchenko’s remarks, Putin stated that Ukraine receives 85% of its gas in the form of in-kind transit fees from Russia (his figure is about quadruple the actual amount) and that Ukraine’s state budget also receives 127 billion in monetary transit fees from Moscow (he did not specify the currency, and the 127 billion are actually the total cubic meters in Russian gas pumped through Ukraine’s pipelines) (TV 5, 1+1 TV, Interfax-Ukraine, March 19).

Black Sea and border delimitation issues

Yushchenko proposed that Russia and Ukraine settle all remaining border delimitation issues during 2005. With almost no outstanding issues on the land borders, Yushchenko called for focusing on delimitation of maritime borders in the Azov Sea and Kerch Strait, “and a small issue in the Black Sea.” He urged the Russian side to recognize the division of the Kerch Strait in accordance with the administrative border between the former Russian FSR and Ukrainian SSR until 1991. (This would follow the generally accepted principle of post-Soviet border delimitation, and would also continue the observance of that division in practice from 1991 to 2003). Russia challenged that delimitation in 2003, triggering a dispute that remains unresolved. Putin replied to Yushchenko during the concluding news conference that the Russian side reserves an answer pending discussions at the level of experts — an answer that seems to presage some procrastination (TV 5, 1+1 TV, Interfax-Ukraine, March 19).